College is expensive and comparing college loans can be a bit tricky, especially when you're just getting started. That's why students and parents need to carefully consider their funding options based on crucial factors such as total cost, future earnings and ability to pay.
While the process can be stressful, a little bit of planning and patience will help you find a financial program that works best for you and your child's situation. And it all starts with a thorough research on comparing college loan options.
Here are a few planning tips you might want to consider:
Learn about federal education loans.
Student loans issued by the federal government, such as the Federal Stafford Loan and Federal Perkins Loan, have low fixed rates and low fees, in addition to having the most liberal repayment flexibility. The Federal Stafford Loan should be a student's first option for borrowing.
Perkins loans are available to financially needy graduates and undergraduates. These loans are directly provided by the college or university and if your family qualifies, it will be included in your financial aid award letter.
Federal PLUS Loans are in the parent name only, meaning the student has no obligation to repay this debt. The rates on these loans, which are set annually (but are fixed for the term of your loan) are not as low as those on the Stafford or Perkins loans and these loans do not offer as many repayment benefits as the Stafford or Perkins loan.
Explore your state-based loans options.
State-based loans, such a those made by RISLA, are another alternative. State-based loans are available to residents of the state where the agency serves or to students from other states who come to the state to study.
For example, if someone from Connecticut goes to Rhode Island to enroll to one of the colleges and universities there, he or she may be eligible to apply for RISLA's state-based loans. The same is true for students who live in Providence, RI, whether they enroll in a school in or outside the state.
State-based loans are different from both private and federal student loans in a lot of ways. For one, unlike most private loans, state-based loans typically offer fixed rates. State-based loans also often offer better rates than those on even the Federal PLUS loan.
Talk to a non-profit, state-affiliated lender if you're interested in exploring your child's state-based college loan options.
Consider private loans.
If you are unable to exhaust your federal or state-based loans options, or if you need additional loans, then you may consider shopping for private loans. Check with your trusted bank or other financial institutions.
While private loans usually have higher interest rates than federal and state-based loans and often offer variable rather than fixed rates, they are typically better than credit cards.
Pay attention to terms, rates and fees. Compare and save.
When shopping for a college loan, you need to pay attention to specific disclosures. Here's a quick overview of the crucial details you should look into.
College loan interest rates vary. It's one of the most important factors to consider when shopping for college loan options.
Education loans come with two types of interest rate: fixed and variable. Fixed rates remain stable for the life of the loan, while variable rates fluctuate depending on economic conditions. Right now, variable rates are at historic lows, so it's very possible they will increase before your loan is paid in full if you take on a varible rate loan. If a rate on a variable rate increases, so does your monthly payment.
Annual Percentage Rate (APR)
Other things being equal, you'll want to get the lowest possible APR. It takes into account the interest rate and other fees assessed on your loan.
The term refers to the amount of years borrowers are expected to repay their loans. Banks usually offer 5, 10, 15, and 20 years of repayment terms. It's best to decide on how much you can afford to pay. A 5-year repayment term, for instance, will accrue a lesser amount of interest (and sometimes comes with a lower interest rate) than a 10-year term—but your monthly payments will likely be higher.
Before borrowing any loan, it is important to understand what your monthly payment will be and ensure that it will be affordable for whoever has agreed to repay the loan.
Check for other fees that may significantly increase the total amount you need to repay. It's easy to overlook these fees. Be sure to consider returned check fees, administration fees, late payment fees, origination fees, repayment fees, and other fees.
Benefits & protections
What benefits does the loan offer? Do you get an interest rate discount for making automatic monthly payment by debit? Are there any reward programs available? Also, what protections are in place on the loan? What are the deferment and forbearance options? Are there extended or income-based repayment plans? What happens if the student or parent becomes deceased? It is important to know what happens if you land in an unfortunate and unexpected situation. Consider the answers to these questions when you are determining the overall best loans for your family.
Finally, it happened! Your child received his or her acceptance letter. And with it came what you were waiting for - the financial aid award letter. Lots of parents are surprised to see what the school offered and sometimes were excepting to contribute less to tuition costs than indicated on the financial aid award letter. If you fall under this category, you don’t have to just accept the award as it. The award letter is just an offer. You can accept, decline or appeal any part of the financial aid award.
1. Contact the financial aid office.
Every financial aid office has specific rules about appealing a financial aid award letter. These rules are called appeal procedures. As the parent, you will likely want to handle this part instead of letting your child appeal. Also, you may want to call or go to the financial aid office in person rather than emailing them. It might help you get quicker results.
When discussing the appeal, tell the financial aid officer exactly what you expected. You don’t want to be harsh or nasty. Just let him or her know that you believe you deserve a specific dollar amount. You want to use terms that include special circumstances. When a financial aid office calculates a financial aid award, it uses information from the Free Application for Student Financial Aid (FASFA) and sometimes from the CSS Profile as well. Your circumstances may have changed since those forms were filed. Special circumstances gives the financial aid office a way to recalculate your child’s financial aid award letter.
Some special circumstances include:
- You or your spouse losing a source of income (job, child support, social security benefits).
- You or your spouse being enrolled in a degree program.
- Elder care expenses (you are taking care of a relative).
A financial aid office doesn’t include things like standard of living, paying money to your church or vacation expenses as special circumstances (although it would be nice!).
2. Tell the financial aid representative exactly what you want.
You want to know the procedures to appeal the financial aid award letter. This may be a certain appeals form or a letter you must write. Depending on the school, it may be both. So once the financial aid representative tells you about the appeals process and deadlines, request the needed form. This seems like a no-brainer, but it’s easy to forget.
3. Use correct terminology when discussing the financial aid award letter appeal.
Whether you are talking to the financial aid representatives or writing an appeal letter, use the right terminology. For instance, if you have to write a letter you want to start with the fact that you are requesting reconsideration of aid offered to your child. Be clear about why you are making the request. Try to avoid phrases like "negotiate," "bargain," "re-do" or "money your child deserves" in your request.
Remember to provide specific documentation to support your appeal. For example, if you lost your job, you want to include your last pay stub or unemployment documents. A financial aid office won’t take your word alone regarding a change in circumstances. Always be specific as you can regarding the details that changed your finances.
4. Complete the appeals process on time.
The majority of schools have a deadline for appealing financial aid. You don’t want to wait until it’s time for your son or daughter to start school. Pay attention to the deadline the financial aid office provides and adhere to it.
5. Submit the appeal.
Once you submit the financial aid award letter appeal, ask when to expect a decision. The appeals committee typically decides each appeal in categories. For instance, they may make decisions on transfer students at a different time than early admittance. The time may vary by date.
Remember a financial aid award letter is an offer that may be changeable depending on your financial circumstances. The important part of the appeals process is documenting the need for more financial aid for your child. Without documentation, you may not have a positive outcome.
You've been accepted! Now what? Making an enrollment decision may seem like a no brainer if you got into your number one choice school. But with the high costs of colleges these days, you better think twice and compare costs and financial aid awards before sending in your enrollment decision.
More and more these days, we hear from students that they wish they understood how much money they would make after college before deciding to borrow. Does your number one choice school come with a signicant amount of borrowing attached to it? What career do you plan to pursue? Is it worth it to be in serious debt after you graduate to go to your top choice?
So, how can you decide what is the best choice for you and your family? We recommend you start by researching entry level salaries in your desired fields of choice. A good rule of thumb (although not always a perfect one) is not to borrow more than one year's worth of your starting salary (and this is combined for all 4 years, folks!).
For example, according to salary.com, a high school teach in Cranston, RI, has a median salary of $57,718. This means half of teachers make more than this, and half make less. As an entry level teacher, you are likely to make less. For example, the tenth percentile of the range of salaries for Cranston High School teachers is at $34,819. This is probably a safer number to expect for your career choice. What this means is that you shouldn't borrow more than $34,800. The thing is, $34,000 is still a lot to borrow. If you borrowed this amount, and had an average interest rate of 5% on your loans, and repaid them over 10 years, you would pay about $370 a month. Is this what you really want to be doing? What other sacrifices will you need to make to afford this payment? If you have an opportunity to borrow less by attending a different school (or nothing at all), and the school can still meet your academic needs, isn't at least worth considing?
So, now that you have researched your starting salary, what next? This is the time to compare and contrast your financial aid award letters. We recommend following the below set of steps to make an apples to apples comparison.
- Add up your direct costs at each school. These costs include, tuition, fees, room and board. Direct costs are those that will be included in your college bill, and don't include things like living expenses, your books or a new computer.
- Subtract the total amount of grants and scholarships you were awarded. Make sure you understand the terms of these awards and know whether they are one time awards or if they are renewable in future years. If they are renewable, what do you have to do to continue receiving the award?
- Subtract your family resources for payment. This includes any student or parent savings, earnings, college savings accounts, or gifts from family members that you plan to send to your college.
- What are you left with? This number is the number you want to compare from college to college. An "award" might be bigger at one school, but the bottom line is how much you will have to pay them at the end of the day, whether it be through loans, a payment plan, or work-study.
Besides grants and scholarships, your school may have included any of the below loans in your financial aid award letter:
- Federal Direct Student Loans - These loans, formerly referred to as "Stafford" loans come in two types. Subsidized loans are the better of the two options because the governments pays the interest on these loans while you are in school. Your family must be eligible to receive this type of loan (find out by filing the FAFSA). You are responsible for all interest charges on your unsubsidized Direct Student Loans. The Federal Direct Student Loan, regardless of which option you receive, are often a student's best option for borrowing since they carry a low interest rate (3.86% for undergrads for the 2013/14 academic year - rates to be set for 2014/15 in May) and low fees (1.072%).
- Federal Perkins Loans - Not all schools have funds to award these. If they are included in your award, you will receive them at a 5% interest rate once you sign your promissory note.
- Federal PLUS Loans - Some schools include the parent PLUS loan in their award letters. If you filled out the FAFSA, you can apply for this loan whether or not it is included in your award. For 2013/14, this loan carried an interest rate of 6.41% and fees of 4.288%. Rates for 2014/15 will be determined in May.
Keep in mind, you are not required to accept your financial aid award letter in full. You can choose to accept a portion ("yes, please, to the grants and scholarships!"), deny a portion ("I'll pass on the PLUS loan"), and lower the amount on another part ("I only need $2,000 for the Federal Direct Subsidized Loan"). Before accepting any loan, be sure to understand the rates, fees, terms and compare it to other options out there. Just because it is in your financial aid award letter doesn't necessarily make it the best option for your family.
Need assistance comparing your financial aid award letters?
Understanding your child’s financial aid award is probably more daunting than completing all the admission requirements to get him or her into college. Basically, the financial aid package includes the state and federal funds to pay your tuition as well as any awards the college is giving you from their own funds. Keep in mind that the money in the award may not (and usually doesn't) cover the entire tuition or even your family's Expected Family Contribution, as determined by the Federal Department of Education when you submit the FAFSA. So you and/or your child may have to figure out how to pay the remaining balance.
Financial aid that is considered a gift are grants and scholarships. College grants are free money given to you to reduce the amount of your tuition. In other words, your child doesn’t have to repay them. They can be given to you by the State of Rhode Island (if you are a resident and you filed your FAFSA by March 1), the federal government, the college/university, or a private donor.
Grants can vary according to who they are given by. For instance, your child may receive a grant specific to age, gender, race or academic pursuit. Or the grant may be awarded solely on financial need, as is the case for all federal grants and most state-based grant programs.
State and federal grants are the most common types of grants students receive. For example, the Federal Pell grant is available to students who meet certain qualifications like being an undergraduate and from a low-income household. Other grants are geared toward academic pursuits such as music, technology and nursing. These awards are usually offered by private organizations or donors through the college itself.
Another source of free money are scholarships which may also be listed on the financial aid award. Scholarships may be need- or merit-based. Need-based simply means based on financial need. Merit-based means students earn the scholarship based on either meeting or exceeding specific standards. Standards are set by the person, company or organization giving the scholarship, or by the school. Some scholarships you need to pursue on your own and will not be included on your financial aid award. You can look for local scholarships at www.rischolarlships.org.
Self-help financial aid is repaid by paying money or working. Whether your child has to work to repay the self-help aid or not depends on the type of aid on the package.
Work study is included on the award. However, it doesn’t reduce the cost of tuition. The work study program offers wages to pay the student through part-time employment to assist with college expenses like books or tuition. Your child will receive at least the federal minimum wage per hour for working through the work study program. It is up to your child to apply for work study jobs and work the hours necessary to receive the funds awarded. Not everyone receives work study.
Certain types of loans are also listed on the financial aid award. They must be repaid to the lender, regardless of the type of loan. Some student loans are based on credit. These are typically private student loans offered by financial institutions and companies and these would not be included on your financial aid award. You need to pursue these loans on your own.
The federal government offers student loans such as subsidized and unsubsidized Stafford student loans and the federal Perkins loan. These loans are typically a student's best option for borrowing because they offer low/no fees and low fixed interest rates. Depending on your financial need and eligibility requirements, you may have one or both federal loans on your financial aid award.
Perkins loans are financial aid offered through the school. Federal monies are given to participating colleges to distribute to students according to financial need. Not all schools have these monies to award to students so these loans are less common than federal subsidized and unsubsidized Stafford loans.
Lastly, the Federal PLUS Loan could be included on your financial aid award letter. Not all schools include this loan in financial aid awards and you can apply for this loan regardless of whether or not it is included in your package. There is a basic credit check for this loan. Before accepting this type of award, make sure to compare it to other loan options to ensure you are getting the best deal for your family. Rates and terms vary widely for private and state-based loans so be careful to understand the details before you commit to any loan, regardless of whether or not it is included in your award.
Regardless of the loans taken out to pay for college, the terms of the loan agreement will not be on your financial aid award. Only the money eligible to receive is listed.
Accepting or Declining Aid
A financial aid package isn’t concrete. For instance, you or your child can accept or decline one, part or all of the award. Also, the award may change. You may not be eligible for the PLUS loan because of your credit. It’s best to talk to the financial aid office about any questions you have. If you don't think the award is enough, or your family circumstances have chance, you can appeal the award. Stayed tuned for our upcoming blog on appealing financial aid awards.
When your child leaves home for college, it's a transitional time for the student and the parents. Lots of work has gone into getting her this far, and you want to insure the transition is a smooth one. College planning, for parents, consists mainly of arming your young adult with the skills necessary to succeed independently in this new phase of life. For students, it means knowing how to apply the skills and knowledge to get the most positive outcome from the experience. There are many practical skills college students shouldn't leave home without. Below are some ways to help your fledgling leave the comfort of the nest and soar.
- All young adults should know how to handle common auto emergencies like jump-starting a car, checking the oil and changing a flat tire. While enrolling them in an auto service like AAA is always a good idea, circumstances may arise where they still need to know how to do these tasks themselves.
- Your student should also promise never to text and drive or drive if they are impaired. Discuss with them ways to avoid common but dangerous driving pitfalls and allow them to take an active part in the problem-solving process. Offer some possible solutions, from downloading free cellphone apps that convert texts and replies to audible voice mail while driving to establishing a reciprocal arrangement with a sober friend to agree to provide rides if your son or daughter consumes alcohol or other substances.
- College students should also know how to balance a checkbook. This is a basic life skill everyone should learn, and if your child errs in her accounting and has to pay a few hefty bank fees, don't be in a big hurry to rush in with an open wallet. Experiencing the consequences of financial mismanagement, although difficult, can help your child associates it with negative repercussions, incentivising them to be more careful in the future.
Knowing When to Back Off
It's a real balancing act learning when to intervene and when to sit back and let your college student problem-solve on their own. It helps to realize that your ultimate goal is for them to emerge with a degree and the life skills necessary to cope out there in the world without a safety net. The following are situations your child should be encouraged to handle on her own.
- Problems with roommates or others in the dorm should not require parental intervention. If your child is experiencing problems, encourage them to talk over the situation with the Residential adviser or adult in charge of the dorm.
- Issues with their classes and professors should also be handled independently by your child. Encourage her to make an appointment to discuss any issues with the professor and to avail herself of free tutoring services if she's falling behind in her class work.
When to Intervene
- If your child is having serious adjustment problems and has drastic personality changes, i.e., a former extroverted, fun-loving teen turns withdrawn and isolates herself, encourage her to use the free counseling services on campus. But if you suspect something seriously is wrong, by all means intervene and get her the help she needs.
- Eating disorders are serious problems. If your child is losing or gaining a significant amount of weight -- not the dreaded "Freshman 15" -- you may need to step in and seek medical advice for her.
The most effective form of parenting involves keeping the lines of communication open to your student at all times so she feels comfortable sharing details of her life with you. Remember that the best relationships between parents and young adult children involve mutual respect.
The process of applying for college starts before the senior year of high school. When you think about it, even little kids talking about what they want to do when they grow up is the very beginning of the process. But, the serious planning needs to start in a student's junior year, if not sooner. Students and parents need to consider the type of school, cost and location when considering where to apply.
Make a List
If you're trying to figure out which colleges to apply to, or are a parent trying to start a conversation about college with your high school student, here is a starting list of factors to consider.
- Where? While some students can't wait to get as far from home as
possible others can't imagine ever leaving. Some students want to live in a big city while others think they'll be happiest in a small college town. Have your child think about the things that are important and make a list.
- Major? Some kids have known what they want to do since before they can remember. If they've always wanted to be an artist an art school might be perfect, if they're more inclined to engineering then a campus specializing in that might be the best fit. However, many high school students change their dream career on an almost weekly basis. While this isn't ideal, it is common. If your child fits into this category a less specialized school or even a community college is a great way for them to continue their education while still keeping their options for the future open.
- Cost? Finances are crucial to consider when applying for college. Private schools tend to be more expensive than public, but if a student really excels in an area they may qualify for a scholarship. Also, private schools sometimes are able to offer students more financial aid than their public counterparts. Pay attention to "net price" rather than "sticker price" when comparing college options. Also, be careful of the pitfalls of student loans. While they're great for helping some people achieve their dreams, not all student loans are equal, and you and your child want to be careful not to borrow outside of your means (current or potential). If you can find a school your child will be happy at and not have to borrow, you are in good shape.
- Miscellaneous Concerns? When applying for college these can be almost anything. Do you want a religious school? Is it ok for your child to leave town but would you still like them to be less than a 3 hour drive? Are there specific programs your child would like to be in or professors he or she would like to study with? Available fraternities or sororities? Local activities? Have an open discussions with your child about these concern.
After the lists are made it's then time for students and parents to have a serious talk about what's most important and what's less so. If your child changes his/her mind about his/her career every month then a specialized school probably isn't the best choice. Give your child two years and see where he or she is. Transferring is always an option but keep in mind this can extend the amount of time it takes to graduate which can cost you more in the long run. If your student has his or her heart set on private school but it's not in your budget, maybe having them spend the first two years at community college before transferring and graduating from the dream school could be the best choice. Just be sure to understand what credits are transferrable between the two schools before making a final decision.
See For Yourself
If possible, schedule visits to the campuses your child is considering applying to. Get a feel for the school, encourage your son or daughter to talk to some students about what it's "really like" to be a student there. Get as much information as you can about the schools your child is considering and how they'll meet your child's needs as a student and young adult.
Applying for college is a critical step towards adulthood, but with proper planning it doesn't have to be a confusing one. Start these lists in your junior year or sooner and you'll be well prepared when it's your turn to apply.
Your little chicks are about to fly the coup, but are they truly prepared to take advantage of all college has to offer? With your investment in their education, college planning is important in helping them garner all they can from the college experience, including reaching not just academic goals, but expanding their life experience through independence, extra-curricular, and social activities as well. Help your children gain the most out of their college experience with a few college planning tips:
- Go to class.
While this particular pearl of college planning wisdom is obvious to parents, it may be groan-inducing for your children. However, by simply breaking your wasted investment (both yours and theirs) to a specific dollar amount per each class skipped, children can more easily understand how their absence injures not only their education, but the family pocketbook as well (particularly if classes need to be repeated). Remind them that their academic growth is important in gaining the knowledge and experience necessary in landing that dream job, offering the opportunity for resume-building experience, such as letters of recommendation from distinguished staff, research and teaching assistant opportunities, and more.
- Get involved in extra-curricular activities.
While your children are likely to have and meet an array of friends in college, encourage them to find friends with similar interests by pursuing the arts, clubs, hobbies, teams, community activities, student government, school media, musical activities, and sports that suit them. College planning involving extra-curricular activities should stress to your children that it is not about how many activities they take part in, but simply their commitment to the ones they do choose. These activities help your child to become a well-rounded student, relieve the stresses of academics, and may possibly help them find their life path as well.
- Take advantage of free events, programs, and services.
College is one of the few times in life your children will be surrounded by multitudes of “free” opportunities. From educational and sporting events to social, recreational, professional, and health related programs, facilities, and services, encourage your child to explore all that campus life has to offer in their college planning, such as free access to extensive libraries, state of the art fitness and recreational facilities, tutoring, healthcare, and more. These free events, programs, and services will most likely be once in a lifetime opportunities for your children.
- Learn to prioritize.
College planning helps your children learn to balance their many activities – from homework, internships, and extra-curricular activities to fitness, sleeping, and social events. Learning to prioritize while they are pulled in so many different directions is part of college planning that will help them prepare for the rest of their lives. No matter your age, prioritization and time management skills matter.
Making positive connections through networking is important in helping your child realize future goals. Encourage them to make friends and get to know not only fellow students, but professors and alumni as well. Great mentors, such as those they might find in an internship, often offer valuable resources and advice later in life, particularly after graduation when the reality of job-seeking sets in. Inspire your children to really listen to and get to know people, helping them meet the needs of others in order to form lasting, mutually beneficial relationships.
Don’t assume that all benefits of college life will be obvious to your child. Ensure these advantages won’t go overlooked with a few simple college planning tips to keep your children on the right track. Help them get the most out of both classroom and campus life with practical college planning advice. They’ll thank you for it in the future.
Many parents dream of their child going off to college and getting a good job when they graduate. Today it is more important than ever that children attend college and earn their degree to find a good job. The Bureau of Labor Statistics shows that unemployment rates go down and income levels increase greatly by simply having a college education. College planning can be a stressful time for both parents and kids. Here are some solutions to common college planning challenges.
My child doesn’t seem interested in college. The future can be a bit scary for kids just graduating high school, and the thought of the future may have them dragging their feet. But talk to them and listen to what they are saying and often times you can help them come to grips with their fears. Make sure they understand that not all colleges are the traditional 4-year liberal arts schools you often see in the movies. There are community colleges and technical schools out there that teach students specific skills for a career, from automotive mechanics to hairdressing. Talk about these schools with your child and see if they generate more interest.
College seems so expensive, how will we ever afford it? The cost of college can seem to be out of reach. However, researching the total cost, comparing different colleges, applying for financial aid, looking for scholarships, and finding reasonable college loans can all help. The College Board Calculator can help you determine price for each college to help with college planning. Also, remember to focus on the "net price" of a college rather than the "sticker price" which can often lead to shock.
My child can’t decide on what colleges to apply to. Helping your child pick the best college for them can seem hard. But looking at the different institutions can help them choose based on location, setting, their interested major, the size, and other factors can often narrow down the field. If you need help, make an appointment with the College Planning Center. It's free.
The college application essay my child wrote could be better. Many parents are worried about the quality of their child’s essay. But keep in mind that your child has to get in to college on their own merit. So resist the urge to write it for them, re-write what they have written, or tell them what to write. However, feel free to help them by proofreading the essay for spelling and grammar errors.
My child didn’t get into the college of their choice. Many parents (and students too) think that if their child doesn’t get into the right school, that will be the end of things. However, studies by top economists have shown that it isn’t reliant on going to the “right school” but earning their degree that matters. Many students start out at community colleges for their core courses, then transfer to larger schools for further studies. This can be a great way to save on college - just remember to research what credits are transferable and to which schools before making this decision.
My child’s GPA and SAT scores are low. Colleges often list their requirements for admittance. If your child’s scores don’t meet those requirements, don’t despair. Some schools don't have minimum requirements. Instead find schools that they can attend, and explain that if they can keep a high GPA at that school, they can always apply for further studies at another school with the higher GPA, if that still interests them.
Staying calm, organized, and helpful can help your student find the right school for them. The best thing to remember is that this is their life, they are reaching adulthood and to an extent need to be in control of their lives and where they go. But never fear, they still need you. Be helpful, supportive, and proud as they take this next big step in their life.
Getting financial aid for college often seems a daunting process with forms to fill out, deadlines, grants and scholarships. Your first and most important task is submitting an application for student financial aid. The Free Application for Federal Student Aid (FAFSA) is always a must but the CSS PROFILE is equally important at schools that require it.
It is important that all the information on these forms be up-to-date and correct because errors can delay and even prevent you from getting the money to pay for school. But, meeting the school's deadline is a necessity so you can estimate on your FAFSA if you have to and later make corrections after you file your taxes.
Don't panic if you receive your Student Aid Report and see that there are errors. Most mistakes can be easily fixed by going on-line and inputting the correct information. Here are some common mistakes made when submitting the FAFSA and how to handle them.
Common FAFSA errors:
- Incorrect name spelling
- Wrong income information
- Social Security Number errors
- Transposition/typo errors
Social Security Numbers
Making a mistake when entering your student SSN can prevent you from receiving any financial aid because this number is how your school finds your grant and student loan information. An error entering your SSN is the one thing that cannot be fixed on-line through http://www.fafsa.ed.gov/. If your SAR shows the wrong SSN, you can do one of two things: 1) contact the financial aid office at your school immediately to see if they can correct the issue or if you need to submit a new FAFSA or 2) you can make a correction on a paper SAR. Doing both 1 and 2 may cause multiple applications under your correct identifies, which will restrict your online access to your FAFSA for this academic school year, so make sure to only pursue one of the options. If the error is in your parent's SSN, you don't need to submit a new student aid application. Their SSN and other information is easily updated on the website.
Financial information is where transpositions and other number errors can cause you problems. You may well be shocked if your income is $27,000 and the SAR shows it to be $72,000 or $270,000. This can happen if you get your numbers turned around or tried to enter a number as dollars and cents. You may not realize the FAFSA student financial aid website can't detect periods in numbers.
Instead of $27,114.29, the system sees your family income as $2,711,429. It might look bad but this is easily corrected on-line by changing the numbers to reflect your true income.
How to correct/update your FAFSA
Look over your Student Aid Report (SAR) carefully as soon as it arrives. If you need to make changes, begin by going back to www.fafsa.gov and clicking “Start Here” to log in.
Next, click on “Make FAFSA Corrections” and enter your personal ID number. Your PIN is the 4-digit number you created to electronically sign your FAFSA and is used to verify that it is you trying to access your FAFSA information.
Need some help with correcting your FAFSA? Make an appointment with the College Planning Center of RI.
College loans are one way through which many students make their career dreams come true. The only undoing part of this type of loan arrangement is that you have to pay them back with interest. That is why you need to borrow wisely; get the best deal with the best terms possible. Here are some parameters you can use while comparing student loan options:
The interest rate on your loan depends on the type of loan among other factors. Therefore, whenever comparing student loan options you want to find the one with the lowest interest rate. For instance, taking a fixed loan means that your interest rate will remain unchanged for the whole life of the loan. A variable loan has an interest rate that fluctuates monthly, quarterly, or yearly depending on the prevailing market conditions. Consider this when determining what the "lowest" really means.
Take note of the loan option you choose according to its annual percentage rate (APR). This figure takes into account not just the interest rate, but also fees & capitalized interested on your loan.
Variable vs. Fixed rate loans
Student loans come either in variable or fixed forms. Fixed rate loans have rates that don't change. Variable rates change as market conditions change. Variable rates may appear low right now but keep in mind that they can (and likely will) grow. What is your appetite for risk and will you be able to afford a higher monthly payment when rates rise?
Length of term and its effect on monthly payment
A longer loan term often reduces the monthly amount to repay for your loan but increases the total amount you eventually pay. On the other hand, a short-term loan increases your monthly payment but reduces the total amount you have to pay back. However, term alone doesn't affect your monthly payment. You must also take into account interest and fees with the term. Weigh out what is suitable for your financial ability.
Monthly payment amount
Getting to know what you are expected to pay each month on your loan is one way to assess the best deal for you. Be sure to settle for loan that will offer a repayment amount that you can keep up with. The monthly pay is also determined by the amount of loan you take. Estimate monthly payments here.
Forbearance and deferment options
It is always advisable that you consider the future in terms of repaying your loan. Depending on the loan you choose and the amount borrowed, you may be allowed to forbear or defer your repayment. Deferring allows you to stop the repayment for a given period while forbearance may postpone or reduce the monthly rates. Federal student loans have extensive deferment and forbearnace options.
There are some loan programs out there (federal loans and state-based loans included) that offer forgiveness options under certain circumstances. For example, if you enroll in a Pay as your Earn repayment program on your federal Stafford loan, you may be eligible for forgiveness on the remainder of your loan balance after 20 years of repayment. If you work full time in public service, that forgiveness may be in as little as 10 years of repayment with monthly payments based on your income. Other programs, such as RI Student Loan Authority's RISLA Student Loan offer $2000 of loan forgiveness to students who complete an eligible internship. Also pay attention to whether you loan is forgiven in the event of death or disability. Investigate these programs and look for loans that have them. Just make sure you are also paying attention to the bigger picture, like interest rate, fees and other terms.
For one reason or another, you may not be able to meet your monthly repayment as per the agreed terms. Therefore, settle for a loan that is flexible and empathetic on your financial capabilities. Look into whether your loan offers income-based, extended or interest only payments if you need them.
Some loans have fees that significantly increase the total amount to be repaid. Obviously, you do not want to pay more than necessary towards servicing your loan. This is one thing you can’t afford to overlook when comparing student loan options. Pay attention to origination fees & repayment fees as well as late payment fees, administration fees, returned check fees, etc.